Sector Snap: Soda bottlers

A Stifel Nicolaus analyst cut his rating on shares of soft drink bottler Coca-Cola Enterprises Inc. Wednesday and said all bottler stocks may struggle due to lower volumes and higher corn costs.

Analyst Mark Swartzberg downgraded Coca-Cola Enterprises, which bottles Coke beverages, to "Hold" from "Buy" and cut his 2009 profit estimate to $1.26 per share from $1.46 per share.

Swartzberg said Coca-Cola Enterprises, like all bottlers, will likely suffer from far higher corn prices, since corn is a key ingredient in high-fructose corn syrup _ the sweetener used in most soft drinks in the U.S.

He also noted that the company may be seeing sales of vitaminwater drinks take some market share away from other Coca-Cola system drinks in convenience stores. That could lead to lower profit, he said, since a 20-ounce Coke is about twice as profitable as a vitaminwater sold in a convenience store.

Swartzberg also lowered his estimate for 2009 profit at Pepsi Bottling Group Inc., which bottles Pepsi beverages, to $2.37 per share from $2.53 per share.

The analyst noted that Pepsi Bottling Group and Coca-Cola Enterprises have seen demand deteriorate in the U.S. for non-alcoholic beverages.

Consumers have been shifting from sugary sodas to waters and juices for some time. Furthermore, many consumers are limiting their spending as gas and food prices rise.

Coca-Cola Enterprises shares fell 22 cents to $16.82 in morning trading while Pepsi Bottling shares rose 45 cents to $28.33.